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Comprehensive exam Study Guide
Latest Updated 2025/
agent - ANSworks for a client giving advice and with a customer giving information agency - ANScondition which legally exists when a principal contracts with an agent to perform on his behalf. universal agency - ANSauthorizes an agent to handle matters of all types for the principal. Requires power of attorney general agent - ANSauthorizes an agent to transact matters concerning a specific area of business for the principal. example: managing several investment properties specific agent - ANSrepresents the principal for a specific act only, such as the sale of a house express agency - ANSbased on a formal agreement between parties in which the parties express the establishment of an agency and state the terms and conditions EX. listing agreement implied agency - ANSoccurs when parties act in such a was as to indicate that they have agreed to an agency fiduciary relationship - ANSbased on trust and confidence EX giving power of attorney fiduciary responsibilities - ANSOLD CAR obedience, loyalty, disclosure, confidentiality, accountability, reasonable care duties owed to the customer - ANSthe person you do not represent, owe them honesty and fairness termination of agency - ANSdeath or incapacity of either party destruction or condemnation of property expiration of terms by mutual agreement renunciation by the agent (fire each other) bankruptcy of the principal fulfillment of purpose designated agent - ANSperson authorized by the broker to act as the agent of a specific principal sub agency - ANS(not in La) salespersons are general agents of the broker, and therefore owe fiduciary duties to the broker. a cooperating broker may also be a subagent of a listing broker dual agency - ANSthe act of representing 2 principals to a transaction at the same time and require equal loyalty to both. undisclosed dual agency - ANS(illegal in La) may occur unintentionally by either carelessness or misunderstanding disclosed dual agency - ANSrepresenting both the buyer and seller in the same transaction with the informed consent of both agency disclosure brochure - ANSmust be signed by the client and agent before an agent may show a property Pertinent material facts and defects - ANSan agent must fully disclose that he knows to be present in the property he is showing
Comprehensive exam Study Guide
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latent defect - ANSa hidden structural defect that would not be discovered by ordinary inspection fraud - ANSthe intentional misrepresentation of a material fact negligent misrepresentation - ANSoccurs when the agent should have known that a statement about a material fact was false negligent omission - ANSthe agent accidently fails to perform some act, such as delivering a counter offer puffing - ANSexaggerating a property's benefits such as views or landscaping. an opinion agent may be - ANSemployee of a broker or an independent contractor exempt from licensing - ANSfor sale by owner executors, administrators, guardians attorney lending institution city, state, federal appraisers, trustees (la) appraisers must have license environmental hazards - ANShazards you must disclose. option (unilateral contract) - ANSa right extended to purchase real property for a specified amount within a specified period of time. If the second party accepts, the offerer is obligated. Must be signed by one. void contract (La null) - ANSno contract at all. does not conform with law voidable contract (La relatively null) - ANSa contract that is still binding, but is flawed offer and acceptance - ANS"meeting of the minds" offerer makes and offer and offeree accepts or rejects constructive communication - ANSwhen an offerer specifies the means by which he wants his offer accepted. legally binding as soon as the offeree follows offerers directions actual communication - ANSwhen the offerer receives written or oral communication of acceptance Valid contract in La must have - ANScause, even if money is involved. promise is considered to be sufficient cause lesion beyond moiety (la) - ANSif property is sold for less than 1/2 of the market value at the time of sale seller can sue to rescind the sale for up to one year from the time of sale legal capacity - ANSall parties must be legally competent and authorized. minors must have legal guardian legal objective - ANScontracts that are in violation of the law, lack legality of purpose are not valid disclosure - ANSfor a real estate contract to be valid, an accurate legal description of the subject property must be disclosed. actual fraud - ANScommitted when there is intent to deceive constructive fraud - ANScommitted with no intent to harm, mislead or misrepresent
Comprehensive exam Study Guide
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familial status - ANSone or more individuals who have not reached 18 being domiciled with a parent or another person who has or is seeking legal custody. housing for older persons - ANSoccupied solely by persons age 62 or older or occupied by at least on person 55 or older per unit is exempt from familial status 7 protected classes - ANSFRESH CORN familial status, race, e, sex, handicapped, color, o, religion, national origin blockbusting - ANSinducing panic selling for financial gain by insinuation that a minority group is moving into the area steering - ANSchanneling home seekers to or away from a particular area based on race, color, religion, sex or nationality redlining - ANSrefusing to make loans or issue insurance policies within certain areas that are considered to be had risk areas HUD - ANSdepartment of housing and urban development. exemptions to fair housing act - ANSsale or rental of single family home, when home is owned by an individual who does not own more than 3. a broker or salesperson is not used. fair housing act remedies - ANScivil penalties not exceeding $11,000 for first offence may include actual damages, injunctive relief and other equitable relief 3 components of real estate - ANSland improvements plants, trees and crops physical characteristics of land - ANSpermanence or indestructibility, its mobility, its complexity and its uniqueness real property - ANSresidential, agricultural, commercial, special purpose (church,school), industrial economic characteristic that influence the value of land as an investment - ANSscarcity, modification, fixity of investment, situs fixity of investment - ANSimprovements on the land represent capital invested on the land (long term investments) situs - ANSpositive factors may include safety, low traffic volume, accessibility, schools, stores etc mineral rights - ANSowner's rights to things below the surface of the property (la ten years is the maximum amount of time that you may retain, if there has been no activity.) riparian rights - ANSrights that apply to land adjacent to running water. allow owner to use and enjoy, within reasonable limits, navigable waterways - ANSthose accessible to commercial boat traffic are publically owned. the land adjacent, ownership stops at waters edge non navigable waterways - ANSdoes not stop at waters edge own up to midpoint or from bank to bank, if the waterway runs through property Doctrine of prior appropriation - ANSthe right to use water for any purpose other than limited domestic use. (where scarce water is) littoral rights - ANSownership usually extends to the point of high tide. owners may not infringe the natural movement of the waterway
Comprehensive exam Study Guide
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improvements - ANSany permanent, man made attachments or additions to the land (la) separate immovable or movables - ANSimprovements which are not owned by the land owner of the and are known as ex. walgreens, dollar general fixture (la component of attachment) - ANSan item of personal property which has been permanently attached to real property such that it is considered part of the real property. ex. faucet disagreement over fixtures - ANSagreement between parties, method of attachment, intention of the party doing the attachment, adaptability of the attached object to the property severance - ANSan item of real property may become personal property by severance ex. a tree is real property until it is cut down by the owner, at which time it becomes personal property. annexation - ANSwhen something changes from personal property to real property ex. plants trade fixtures - ANSthings attached to real property for the purpose of carrying on a business ex. barber chair fructus naturales - ANSfruits of nature, naturally growing things are considered real property fructus industriales - ANSfruits of industry or emblements, ex farm crops (la crops will be considered movable or immovable) bundle of rights (la usus, fructus, and abusus - ANSright to build, sell, lease, mine for minerals, plant and harvest crops freehold estate - ANSownership interest in real property extending for an indeterminable length of time freeholder - ANSowns the property indefinitely, until he dies, sells, or wills it to someone else. fee simple estate (la full or perfect ownership) - ANSthe most complete form of ownership recognized by law. lasts forever and may be passed from heir to heir fee simple defeasible estate - ANSAn estate which may be lost on the occurrence or nonoccurrence of a specified event. life estate - ANSfreehold, owner holds title as long a he or some other specified person is alive ownership in severity (la sole ownership) - ANSowning property by himself coownership (la ownership in in division) - ANSowned by two or more people tenancy in common - ANSsimplest type. each tenant or owner, holds title to a specific share of property. may sell, will or dispose as he chooses. Joint tenancy (la illegal) - ANScharacterized by possession, interest, time, title PITT PITT - ANSall members must acquire their interest at the same time. equal shares, right of survivorship right of survivorship - ANSWhen one tenant dies, that interest automatically transfers to the other owner or owners dissolution of tenancies in common - ANSpartition suit, partition in kind, agreed upon tenancy by entirety (not in la) - ANSowned by husband and wife. only dissolved by divorce or death community property - ANSall property, both real and personal, that is acquired by the marriage is owned by both spouses as equal partners, each having a half interest
Comprehensive exam Study Guide
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involuntary transfer - ANStitle to real property may be transferred involuntarily, or without the owner's consent examples of involuntary transfers - ANSeminent domain, expropriation(la), escheat, adverse possession condemnation (la expropriation) - ANSgovernments right of eminent domain is expressed through court action known as escheat - ANSwhen an owner dies without leaving a will, without heirs, his property title reverts to the state. state owns up to 20 years or until an heir claims it adverse possession (la acquisitive prescription) - ANSthe acquisition of title to property by possession of property for a statutory number of years. 5- 30 years or determined by state law testate - ANSperson who dies leaving a will legatee - ANSone who inherits property in a will statutory will - ANSformally prepared holographic will (la olographic) - ANStestor's handwriting probate (la succession) - ANScourt proceeding designed to establish the validity and authenticity of the will intestate - ANSperson dies without a will (la) forced heirship - ANSmust leave a certain portion of their estate to their children (forced portion) transfer by accession - ANSthe acquisition of real property interests through natural or artificial causes or acts of God accretion - ANSgradual, physical increase in the size of property as a result of a natural process alluvion - ANSaction of water,flood erosion - ANSloss of property attachment - ANSreal property interest may be gained, lost or transferred by artificial means (fixtures) constructive notice - ANSNotice given by recording a document or taking physical possession of the property. actual notice - ANSThe actual knowledge that a person has about the existence of a particular fact. abstract of title - ANSbrief summary of all recorded instruments which have affected the title chain of title - ANScontinuous linking of owners stretching back to the time when the land's first owner received it certificate of title - ANSafter abstract is done, given by attorney. attorney's written opinion, attached to abstract title insurance - ANSavailable to anyone. protects owner and lender against possible claims by third parties. only protects against the past not the future mortgagees or lender's policy - ANSprotects only the amount owed on the loan mortgagor's or borrower's policy - ANSgood for full amount of coverage, for as long as the owner or heirs have interest in the property encroachments - ANSUnauthorized physical intrusion that encumbers the land of another. An encroachment is a trespass if it encroaches on the land ( a fence, shed, or driveway)
Comprehensive exam Study Guide
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encumbrance - ANSanything that diminishes a person's rights of ownership. a burden police powers - ANSgovernments power to enact and enforce laws to protect general public types of zoning - ANSdirective zoning, protective zoning, nonconforming use, down zoning, building codes zoning regulations - ANScontrolling the use of land to protect property values directive zoning - ANSconcerned primarily with the function of land. used to promote the highest and best use of the land protective zoning - ANSregulates the size and placement of buildings on their lots. regulates distance from streets setbacks - ANSdistance from street, Laws governing the distance from the building to the street, neighboring building, sidewalks, etc. non conforming use - ANSbuilding which was built before a zoning ordinance was enacted, may not conform to current zoning regulations buffer zones - ANScreated for the purpose of separating one land use from another building codes - ANSenacted to specify the standards for construction of new buildings and alteration of repairing old ones. enforced through building permits taxation - ANSad valorem, special assessments ( involuntary specific lien) lien - ANSmonetary claim upon property which uses the property itself as security for a payment of debt general lien - ANSattaches to all of a person's personal property, real and personal special lien - ANSattaches only to the property explicitly encumbered by the lien. ex property taxes ad valorem taxes - ANSmain source of revenue for local governments. according to value assessed value (la) - ANS10% of market value for residential property, 15% of market value for commercial improvements, 10% of market value for lots homestead exemption - ANSassessed value is reduced by the amount if applicable. La $ tax= - ANStax rate x # of 1,000's of assessed value special assessments (debt of buyer not seller) - ANSProperty owners are taxed to fund public improvements that benefit their real estate (sidewalks, sewers, street lights) vendor's lien - ANSspecific voluntary lien used in connection with the purchase money mortgage purchase money mortgage - ANSmortgage arrangement in which the seller accepts a down payment from the buyer and gives the buyer a mortgage on the balance owed on the property mechanic lien - ANSprotects workmen, contractors, engineers etc tax liens - ANShave first priority with federal taxes before state and local taxes. ad valorem taxes are next, then special assessments priority of liens (in foreclosure) - ANSfed taxes, state taxes, property taxes, special assessments, mechanics lien, mortgages specific lien - ANSvoluntary mortgage, involuntary taxes, A lien that attached to one or more specific properties (ex. Mortgage). restrictive conditions - ANSplaces limitations on the grantees property restrictive covenants - ANSpromise by contract or deed between a private person and a subdivider (subdivision restrictions)
Comprehensive exam Study Guide
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balance - ANSproperty values are maximized when all of the factors of production are in balance or proper proportion. capital, management, labor and land change - ANSchanges in physical, social, economic and government forces. continuously effect the value of property conformity - ANSmanner and character of structures are in harmony with one another (subdivision restrictions) contribution - ANSvalue of a particular component is measured in terms of its contribution to the value of the property. ex swimming pool substitution (sales comparison approach) - ANSwhen several similar commodities, goods or services are available agents of productivity - ANSlabor, management, capital, land DUST creates value - ANSdemand, utility, scarcity, transferability influence value - ANSsocial trends, economic and financial factors, gov control, env conditions assemblage - ANScombining 2 or more lots into one large parcel plottage increment - ANSincrease in value. the result of assemblage cost approach - ANSestimate value by adding the depreciated replacement cost or reproduction cost o the improvements to the value of the land if vacant reproduction cost - ANScost at current prices t produce an exact duplicate replacement cost - ANScost at current prices to replace a building with one of equivalent value. replacement is usually lower curable - ANSamount of money spent on repairing is equal to or less than the resulting increase in value incurable - ANSamount of money spent on repairing is more than the resulting increase in value physical - ANSalways curable, wear and tear, structural defects functional - ANSchange in what people want, sometimes curable ex. shotgun house external - ANSnever curable. loss in value caused by unfavorable economic influences sales comparison approach - ANSbased on principle of substitution. the value of the subject property is relative to the cost of acquiring an existing property with similar utility income approach (investors) - ANSseeks to estimate the present worth of a property's expected future income and is used for appraising income producing properties property's value is expressed - ANSIRV formula Net annual income/capitalization rate x value equitable right of redemption - ANSadditional time within which to pay a debt promissory note - ANSproof of the debt. collateral - ANSpledged property for, A security pledged for the repayment of a loan. lien theory - ANSlender holds the lien. states mortgage and pledge title theory - ANSlender hold the title. states mortgage and grant defeat - ANSpaying off the debt hypothecate - ANSTo pledge property as security for an obligation or loan without giving up possession of it. mortgagor - ANSborrower
Comprehensive exam Study Guide
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mortgagee - ANSlender acceleration clause - ANSgives lender the right to demand payment in full of the entire unpaid debt in the event of default interest escalation clause - ANSpushes the interest rate up to the highest rate allowed by law if default occurs usury - ANSCharging more than the maximum legal interest rate prepayment clause - ANSNot in fha r va loans. in firs few years of existence of the note satisfaction of government - ANScancels debt and defeats any interest the mortgagee has had in the collateral property granting clause - ANSpledging the collateral property to the mortgage. defeasance clause - ANSremoves the mortgage when debt is paid escalation clause - ANSgive the lender right to increase interest during the length of the mortgage ins. covenant - ANSobligates the borrower to maintain adequate hazard insurance to protect the property alienation clause (due on sale clause) - ANSmakes the mortgage non-assumable by giving the lender these rights: right to demand full payment, investigate credit of buyer, to raise interest subordination clause - ANSgives lender permission for a subsequent lender to assume mortgage lien rights subrogation - ANSright of a title company to receive any damages available to the insured when the title company has made a payment to settle a claim covered by a policy foreclosure by sale - ANSlender is required to refund to the borrower any profit realized on the sale mortgage foreclosure - ANSupon default, property is sold at sheriffs sale and proceeds up to the amount of the debt go to the lender sale with appraisement - ANSif property does not sale for full amount owed, the creditor may obtain a deficiency judgment for the amount owed. sale without appraisement - ANSlender forfeits the right to obtain a deficiency judgment deed in lieu of foreclosure (la dation en paiement) - ANSborrower sells the property to the lender in return for lender cancelling note conventional loan - ANSnon government government loan - ANSbacked loans underwriting or loan qualification - ANSdetermine the risk a lender is incurring by lending a sum of money 3 areas to look at when underwriting - ANSborrower, property, location of property evaluation of property - ANSappraisal and title report evaluation of location - ANSadequate utilities, street paving and proximity of schools, churches, shopping and rec facilities. loan to value ratio - ANSrelationship between he amount of down payment and amount of loan LTVR - ANSdivide amount of loan by either appraised value or the selling price, which ever is less conventional loan ins - ANSany loan approved for more than 80% LTVR must have PMI
Comprehensive exam Study Guide
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tax deductions - ANSmortgage interest on 1 and 2nd homes, real estate taxes, loan discount points, loan prepayment penalties capital gain - ANSthe profit realized from the sale or exchange of an asset penalties for non compliance - ANS$10,000 fine for each day the violation continues RESPA regulations - ANSapply only to transactions involving new first mortgage referral loans for one family to four family dwellings allocation of customers or markets - ANSagreement among brokers to divide their markets and refrain from competing for each others business price fixing - ANSconspiracy among brokers o set prices for their services, rather than negotiate such fees boycotting - ANStwo or more businesses conspire against other businesses to reduce competition sherman antitrust act violation - ANSmaximum $100,000 fine and three years in prison duties of a property manager - ANSto produce best possible net operating income, to maintain and increase the value of the principals investment lessee - ANScontracts to pay rent to the lessor, lessor conveys an interest in the property to the lessee Gross lease - ANSknown as the fixed lease, straight lease and flat lease Gross lease requires - ANSrent payment in fixed amounts at specified intervals throughout the lease's term net lease - ANSlessee agrees to pay a fixed amount of rent, plus a share or all of the properties operating expenses (commercial) percentage lease - ANStype of variable rent lease, retail, bases rent on business's gross income graduated or stepped lease - ANSrent increases at the set dates in the future Unilateral Contract - ANSContract containing ONE promise given in exchange for completing an act. NO obligation to act. Bilateral Contract - ANSContract containing TWO promises. Example: A listing agreement is a bilateral contract Client/Principal - ANSA person who has entered into an agency relationship w/ a licensee & with whom there is a written contract Customer - ANSAny 3rd party w/ whom a licensee works In-Company Transaction - ANSTransaction in which the buyer and seller are both represented by the same brokerage. Management-Level License - ANSA licensee who is employed by or affiliated w/ a brokerage who has supervisory responsibility over other licensees. Statute of Frauds requires the following: - ANS1) Certain contracts be in writing to be enforceable, 2) All real estate contracts for the sale of LAND & ALL LEASES for more than one year, options for more than 6 months, must be in writing & signed by all parties. Novation - ANSSubstituting a new obligation for an old one. Also, a transfer of rights and/or duties under contract. If the original party to an agreement is replaced due to novation, are they liable? - ANSNo
Comprehensive exam Study Guide
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Mailbox Rule - ANSAcceptance that becomes effective as soon as it is sent in the mail, unless the contract specified a certain means for delivery. Grantor is the - ANSOwner Grantee is the - ANSBuyer Optionor is the - ANSSeller Optionee is the - ANSBuyer Lessor is the - ANSLandlord Lessee is the - ANSTenant Vendor is the - ANSSeller Vendee is the - ANSBuyer Mortgagor is the - ANSBuyer Mortgagee is the - ANSLender Trustor is the - ANSBuyer Trustee is the - ANS3rd Party to the transaction Regulation Z dictates - ANSDisclosure Requirements in Credit Transactions, including the disclosure of the Annual Percentage Rate (APR) Regulation Z applies to: - ANSALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000. The Cooling Off Period is a condition of: - ANSRegulation Z. It gives the customer the right to rescind the transaction for up to 3 business days following the transaction for liens placed on a principal residence. RESPA stands for - ANSReal Estate Settlement Procedures Act RESPA requirements include: - ANS1) Lenders must give borrowers a good faith estimate of closing costs.
- Lenders must give borrowers a HUD booklet describing closing costs, settlement procedures & borrowers rights.
- Closing agent must prepare a HUD stmt detailing how much was paid to what companies for what services
- Borrower must be given right to inspect HUD stmt 1 day before close.
- Lenders & other parties must give full disclosure of all business relationships.
- Lender must disclose to borrower if the loan is likely to be sold to another investor. RESPA prohibits: - ANS1) Kickbacks & fees for services not performed in connection w/ the closing
- It limits the amount of escrow reserves a lender can hold
- The sale may not be on the condition on the use of a certain title co or escrow co. chosen by the seller. Annexation is - ANSthe act of bringing something or putting something on the land. When determining annexation, value of the item is RARELY considered. The RELATIONSHIP if the parties is more important. Doctrine of Emblements - ANSsays that a TENANT farmer may return to pick the 1st crop after the land has been sold. Fixtures - ANSMan made attachments Bundle of Rights - ANS1) Right of use
Comprehensive exam Study Guide
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Writ of Attachment - ANSA document filed during a lawsuit that prevents a debtor from conveying the property Market Price - ANSWhat the property actually sells for The 3 approaches to value are: - ANS1) Market Data Approach (single family homes)
- Cost Approach (commercial property)
- Income Approach (income producing property) Steering - ANSTrying to influence a buyer's housing choice using race, religion, ethinicity, national origin, or ancestory factors as the reasoning. The Civil Rights Act of 1866 Covers: - ANS1) Race
- Color
- Ancestry (it's the only act that covers this) It applies to all property (Real & Personal) There are no exceptions The Federal Fair Housing Act Covers: - ANS1) Race
- Color
- Religion
- Sex
- National Origin
- Disability
- Familial Status It applies ONLY to housing & land for housing Exceptions:
- FSBO
- FSBO - 4 plex
- Religious Groups
- Private Clubs The Federal Equal Credit Opportunity Act applies to: - ANS1) Race
- Color
- Religion
- Sex
- National Origin
- Age
- Marital Status
- Receipt of Public Assistance A real estate broker is a - ANSSpecial Agent Dual Agent - ANSOne broker representing both the buyer & the seller in a single transaction A salesperson - ANSis a subagent of the client, has no direct relationship to the principal, is only responsible to the broker. Fraud - ANSIntentional misrepresentation of facts Violations of the Sherman Antitrust Act include - ANS1) Price Fixing
- Allocation of the market
Comprehensive exam Study Guide
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Exclusive Right to Sell Listing - ANS1) Only one broker is authorized to sell
- the broker receives a commission no matter who finds the buyer Open Listing - ANS1) Any # of brokers may be retained
- The broker who sells the property receives the commission. After a purchaser signs a sales contract, the salesperson must do which of the following? 1 Keep the original contract & give the purchaser a copy the next day.
- Give the purchaser a copy immediately
- Mail the purchaser a copy after the statutory 3 day cooling off period
- None of the above - ANSAnswer: 2, Give the purchaser a copy immediately Which one of the following is NOT real property? 1 Wall to wall carpeting installed over plywood subfloor 2 Built-in dishwasher 3 drapes 4 sump pump - ANSAnswer: 3, Drapes An unlicensed admin for a property manager can ONLY do which of the following tasks? 1 Collect rents 2 Publish a listing 3 Take a listing 4 Negotiate a contract - ANSAnswer: 1, collect rents All of the following are examples of a specific lien, except: 1 Property Taxes 2 Judgment 3 Mechanic's lien 4 Mortgage - ANSAnswer: 2, Judgment Baker conveys a life estate to her grandson & stipulates that upon her grandson's death the title will pass to her nephew. What is the nephew's interest called? 1 Estate in reversion 2 Estate for years 3 Estate in Remainder 4 Periodic estate - ANSAnswer: 3, Estate in Remainder If a spouse owns a parcel of land separately, the spouse is said to own it: 1 As a joint tenant 2 As a tenant in common 3 As a tenant by the entireties 4 in severalty - ANSAnswer: 4, in severalty Taxes are levied on a property owner to pay for improvements that benefit only that property are called: 1 Fees 2 General Property Taxes 3 Special Excise Taxes 4 Special Assessments - ANSAnswer: 4, Special Assessments The market price of real estate is generally the same as: 1 Sales Price
Comprehensive exam Study Guide
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Which statement is TRUE of listing agents? - ANSThey must present every written offer to the seller. A salesperson owes all of the following fiduciary duties EXCEPT - ANSprepare a power of attorney for the buyer. A listing agent tells a buyer-customer that the seller is under pressure to sell because of a pending divorce and possible foreclosure. Such disclosure is - ANSunacceptable because of the fiduciary duty owed the owner. Sally, as an agent for the seller, listed and subsequently sold George's town house. She did not tell George that a major zoning change in progress would allow business use in the area, thus increasing property values. Which statement is TRUE? - ANSSally was required to disclose the change because it was a material and pertinent fact. Which is NOT a fiduciary obligation owed to a client? - ANSInspection A material fact is one that - ANSa reasonable person might feel is important. A customer is entitled to all of the following - ANSthe broker's opinion of value. Universal agency - ANSgives a very broad and general scope of power to the agent to act for the principal. General agency - ANSis more restricted than in universal agency. The agent is authorized to conduct an ongoing series of transactions for the principals and can obligate them to certain types of contractual agreements. Special agency - ANSsometimes known as a limited agency, authorizes the agent to perform only those acts permitted by the principal. Fiduciaries - ANSare held to the highest amount of good faith, are required to exclude all selfish interest, are prohibited from putting themselves in positions where personal interest and representative interest will conflict. The most important obligations a fiduciary owes to a principal can be remembered by using the "OLD CAR" memory device: (1) obedience, (2) loyalty, (3) disclosure, (4) confidentiality, (5) accounting, and (6) reasonable care and diligence. Reasonable care and diligence - ANSReal estate agents are held to a standard of care that requires, among other things, that they be knowledgeable concerning the land, the title, and the physical characteristics of the property being sold. Obedience - ANSThe agent has an obligation to follow the lawful instructions of the client. Loyalty - ANSAgents must always act in the best interest of their clients and must be loyal to the trust placed in them. Disclosure - ANSA key point related to loyalty is the obligation of the agent to make a full, fair, and timely disclosure to the client of all known facts relevant or material to the transaction. Full disclosure relating to the property - ANSregardless of whether the fact is favorable or unfavorable, i.e. property defects, defects in the title, .... Full disclosure of relationship - ANSThe real estate agent must disclose to client any special relationship that might exist between the broker and any of the broker's associates and the other parties in the transaction. Full dislcosure of other offers - ANSUnless instructed otherwise by the Seller, the listing agent should continue to present all offers until the transaction is closed.
Comprehensive exam Study Guide
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Full disclosure of information - ANSBecause the licensee's relationship with the client is that of a fiduciary, licensees must always place the interest of the client above that of their own interest. Full disclosure regarding status of earnest money deposits. - ANSThe buyer, not the broker, is responsible for depositing the earnest money with an escrow agent on final signing of the contract by all parties. Full disclosure of buyer's financial condition. - ANSThe seller's agent must disclose to the seller all information, good or bad, regarding the buyer's financial condition. Full disclosure of property value. - ANSDisclosure of property value is a very important part of an agent's fidcuciary duty to the client. Real estate agents provide a broker price opinion (BPO) or a comparative market analysis (CMA) to a consumer. Full disclosure of commission split. - ANSThe listing agent must disclose to the seller the existence of any fee-sharing arrangement with a cooperating broker. Full disclosure of contract provisions. - ANSBefore executing any document that is intended to be legally binding the licensee is obligated to discuss the provisions of the contract with the client. Confidentiality - ANSThe duty of loyalty requires that the agent keep confidential any discussions, facts, or information about the principal that should not be revealed to others. Accounting - ANSMoney received by a broker as a result of transactions such as purchase contracts or property management agreements are trust funds and are frequently held by the broker for the benefit of the principal. Minimum Service Requirements - ANSA party's agent has a fiduciary duty to provide certtain defined minimum services to their client, services that cannot be passed to the other broker in the transaction. Agency is - ANSone person acting on behalf of another. An agent works on behalf of - ANSthe client. TRELA - ANSis the law that establishes the duties of real estate licensees. The Texas Real Estate Commission - ANSholds the broker accountable for the professional actions of sponsored associates. A broker is representing Jim Smith, a buyer. In this transaction, Smith is considered a(n) - ANSclient. People who engage an agent to represent their interests in a transaction are called principals, or - ANSclients. A key distinction between the services given to clients versus those given to customers is that
- ANSa. advice, opinions, and advocacy are given to clients, not customers. A licensee NOT associated with the listing broker is known as a(n) - ANSsubagent. One of the BEST ways a broker might protect against agency problems is to - ANSdevelop a clear, written office policy regarding agency issues. A key reason to study agency today is - ANSthe increased litigation against agents. Licensee (active) - ANSA person licensed by the Texas Real Estate Commission (TREC) to act as a broker or a salesperson in a real estate transaction.
